The UK’s financial watchdog has set diversity targets for FTSE listed companies, including that 40% of boards should be women.
The Financial Conduct Authority (FCA) has finalised rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management.
Under the rules, listed companies need to meet or explain why they are failing to reach the targets.
The first requirement is that at least 40% of the board should be women.
Another target is that at least one of the senior board positions (chair, chief executive officer, chief financial officer or senior independent director (SID) should be a woman.
The final target is that at least one member of the board should be from an ethnic minority background excluding white ethnic groups.
The goal is to make it easier for investors to assess leadership diversity across different companies.
The FCA said this approach sets positive diversity targets for listed companies. “If they cannot meet them, they need to explain why not.”
Sarah Pritchard, executive director of markets at FCA, said: "As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at Board and executive management level will help hold companies to account and drive further progress."
The FCA will review the rules in three years’ time to make sure they are working and to check if the diversity targets are still appropriate.
The rules will apply to listed companies for financial accounting periods starting from 1 April 2022.
Watch: How women board members could boost profits